Sabre and Expedia announced they had been warned by US Department of Transportation against showing bias in displays of fare and service information amid Sabre’s dispute with American Airlines (Bloomberg, 15-Feb-2011). Such actions would violate laws against unfair and deceptive trade practices. American Airlines has developed its own technology to send information to travel agents instead of relying on distributors.
Sabre and Expedia confirm warning by DoT
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Disruption in distribution in the travel industry – challenging the status quo
By Martin Warner
“A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances.” The term was defined and the phenomenon analysed by Harvard Business School Professor Clayton M. Christensen beginning in 1995. Since then, the term has become the standard euphemism for any supplier who has a desire to change the status quo to their sole advantage.
US DOT rejects Qantas-American Airlines joint venture under pressure of unchecked consolidation
After complaints about airlines amassing power through joint ventures to the detriment of consumers, the US DOT appears to be exerting greater and more conservative scrutiny on partnerships. DOT has rejected a proposed JV between American Airlines and Qantas. After DOT declined their request for a much longer response time American and Qantas withdrew their application, submitted in Jun-2015.
At a top level the JV does seem to raise concern: combined, Qantas and American would hold 59% of the US-Australia market. Yet almost all of that – 53% – is from Qantas; American adds only 6ppt.
DOT rejects the notion that such larger market share can possibly be in the interest of consumers. Yet it appears to overlook the benefit American might bring in exchange for incremental market share gains. Nor is it clear if this combination is more anti-competitive than some JVs where two airlines, each with a small- or medium-sized position, combine and become multiples larger. Qantas' 53% market share was earned through quality and smart loyalty programme development while competitors lagged.
Qantas will continue growth in North America, its most successful international market, but American Airlines' growth is uncertain and it may re-evaluate a supposedly planned Los Angeles-Melbourne 787 service.